We begin each new client relationship with our holistic financial planning process. There are a variety of reasons that might bring a client to our firm, and by going through this process we’re able to identify what needs each client has and how we might be able to help.
When starting the financial planning process, we often start with a budget. Whether for young professionals, a family, or someone preparing for their retirement, a budget is an important component of the planning process. If we determine that this is appropriate for your financial planning process, we will work with you to develop your budget. The first step in the development of a budget is an accounting of net income. The next step is determining how much of that income is being spent and what it is being spent on.
Saving for Future Goals
Once the budget is complete, we can determine the best strategy for saving for future goals. We refer to this as the “bucket strategy”, and it involves allocating the net savings to different buckets related to individualized goals. The basic strategy includes an allocation to cash flow, emergency or near-term savings, mid-term savings, and retirement. How the savings is allocated and how it is invested is dependent on your unique situation and risk tolerance.
There can also be a debt bucket if you are also managing credit or student loan debt.
If you are managing credit card or student loan debt, we often start with a budget and savings strategy first. This allows us to better frame the approach to managing your debt. We can help you to structure paying off your debt while putting you in a position to avoid incurring more debt in the future. Depending on your unique situation, we might refer you to a credit union or debt counselor for further assistance.
Preparing and planning for retirement is one of the most common motivations for bringing a client to Hansen’s. Our retirement planning process is very thorough and starts with a conversation about what you are envisioning for your retirement, and what your goals are. We then do an accounting of what you have already saved, how your investments are allocated, and how much you are currently contributing to your retirement accounts. We discuss the different income streams that you might have during retirement, such as a pension, part-time employment, or social security, and are able to advise you on the best strategies for each. Retirement planning is often about setting priorities when it comes to retirement age, amount of retirement income, and how much is being contributed to retirement accounts. We will work with you to create a plan that is achievable and meets your goals for the future.
Estate planning is one of the most misunderstood components of financial planning. While often assumed to be for those handling large estates, most of our clients are often in need of an estate plan. It can range from very simple to complex depending on your unique situation. For a family or young professional, a basic estate plan is often sufficient. This would include a will, health care proxy, and power of attorney. Life insurance is also often a consideration in these circumstances. More complex estate planning can include the creation of revocable and irrevocable trusts, Medicare or long term care planning, charitable giving, and life insurance planning strategies. These plans are developed in partnership with your attorney.
Saving for a child or grandchild’s college education is an important part of financial planning. For some of our clients, this starts with the budgeting process or savings strategy (link). We compare the different methods for saving for college, including UGMA or UTMA accounts, or a 529 plan, to determine the best approach. We can advise you on how much you will need to contribute to reach a future goal. We can also back into a goal for college, by completing a budget, and determining how much you can contribute to a college savings account, and what the future benefit will be to your child or grandchild.
When we are working with a client that has a disability, or that has a child or grandchild with a disability, there are important considerations. We will work closely with your attorney to determine the best approach, which often includes a special needs trust. This allows for the disabled person to inherit assets while preserving their ability to continue receiving benefits.